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Mafatlal, Apollo strike 58-42 deal for Nocil's division to form Polyolefins Rubber Chemicals

Mafatlal Industries Limited and Associates today signed an agreement with the Onkar S Kanwar group of the Apollo Tyres to divest their stake in the rubber chemicals division of Nocil.

Nocil is India’s largest producer of rubber chemicals, with sales from this division accounting for nearly 20 per cent of the company’s total sales of Rs 11 billion in 1997-98.

Mafatlals will initiate action to separate the rubber chemicals division of Nocil.

It is proposed that it will be vested in a new company by the name Polyolefins Rubber Chemicals Limited, pursuant to a scheme of demerger of Nocil after approval by the high court.

Mafatlals will divest approximately 42 per cent of their stakeholding in the newly created rubber chemicals company in favour of Onkar S Kanwar group, for a consideration of Rs 550 million.

When reports first appeared in mid-1998 about the deal, the sale price was said to have been fixed much lower than the anticipated Rs 2 billion. ICI (India) and US chemicals major Crompton & Knowles were also apparently in the race for the Nocil's division.

J M Financial (representing MIL and NOCIL) and Enam Financial (representing the Kanwar group) were advisors to the transaction.

The rubber chemicals business is a significant exporter to highly competitive and prestigious markets like Asia Pacific, Europe, North and South America.

The new rubber chemicals company will continue to follow the policies of the erstwhile rubber chemicals division of Nocil.

The acquisition heralds an entry of the Kanwar group in the business of speciality chemicals which will be focused on besides the tyre business.

Nocil had recorded a 37 per cent drop in net profit to Rs 380 million for the financial year ended March 31, 1998. Sales, including excise, totalled Rs 11 billion, less by 6.3 per cent from the previous year’s figure of Rs 11.74 billion. About 70 per cent of Nocil's sales came from petrochemicals, 20 per cent from rubber chemicals and ten per cent from plastic processing chemicals.

Additional reportage by UNI

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